What we’re covering ?
- Shopify stepping up its logistics and last-mile fulfillment services to compete with Amazon ?
- This week’s featured news stories, including the continuing railroad union battle with the US Congress negotiating sick leaves for workers ?
- January imports rising compared to December, but Feb 2023 still looking weak
- Logixboard’s featured content & upcoming webinar ??
IN THE NEWS
Shopify To Offer Ocean Freight, Inventory Management, and Last Mile Services
Throughout 2020-21, as the world went through multiple lockdowns thanks to COVID-19, demand for e-commerce services increased exponentially. While inflationary pressures may have slowed demand in the last quarter of 2022 and the start of this year (2023), e-commerce is still growing. Thanks to pioneers like Amazon, consumers are now used to super-fast or same-day deliveries. Businesses that want to stand out today need to ensure an omnichannel experience, where consumers can receive satisfying last-mile fulfillment super fast. In a bid to help companies of different sizes and values grow, Shopify is stepping up its logistics and fulfillment services. This expansion effort is probably going to help merchants compete with Amazon.
Shopify, which provides e-commerce tools for retailers, said it has struck a deal with digital-focused freight forwarder Flexport Inc. to manage the flow of imported goods and will add estimated delivery dates for companies using Shopify’s platform. The Canadian company is rolling out the new features as the pandemic-driven boom in e-commerce sales has receded and companies are fine-tuning online sales strategies that they built as consumers were ordering goods at a rapid pace.
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TOP HITS THIS WEEK
From The Manifest
LOGIXBOARD INSIDER
As we head into contract season, nailing down a sales strategy is top of mind for forwarders across the globe.
In our upcoming webinar, “How Freight Forwarders Can Win More Bids in 2023,” we’re sitting down with logistics experts to hear their insights on how to navigate this year’s freight market to win more bids.
WHAT’S HAPPENING AROUND THE WORLD
Featured News Stories
- The railroad union battle is once again out front in the US. President Biden agreed to legislation in Congress in late 2022 to avert a nationwide rail strike, without paid sick leave. Senators Bernie Sanders, Mike Braun demanded all railroad carriers offer comprehensive sick leave to workers.
- Packaging giant highlights deflating demand as US consumers are avoiding buying red meat and shopping online. Sealed Air, which specializes in packaging supplies for e-commerce, meat, and industrial goods saw volume drop by 6% in 2022.
- Relief efforts in Turkey and Syria face logistical hurdles as earthquake-damaged ports, airports, bridges, and roads hinder transport to a devastated region. Aid groups and logistics operators say moving supplies through the region’s devastated infrastructure will be a major challenge.
- UPS plans to deploy its smart package initiative involving RFID throughout the rest of its US network this year after its initial success at select facilities in 2022, CEO Carol Tomé said on an earnings call last week.
ON OUR RADAR
Imports Down to 2019–2020 Levels, Despite Rise in January
Throughout the pandemic, thanks to lockdowns, remote work, and other factors, demand has been volatile. As a result, shipping rates too had been fluctuating throughout 2020-21. Finally, in the second half of 2022, we saw declining demand as a result of inflationary pressure. This essentially ensured that shipping rates dipped down as well. Now in February 2023, spot markets seem to be flatlining according to the FreightWaves Supply Chain Pricing Power Index.
The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.
Freight demand is sliding, with few sources of upward pressure bearing on volumes for the near future. Consumers’ appetite for discretionary spending has been usurped in favor of squirreling away income into personal savings. Given the record-high interest rates on credit cards, many consumers simply cannot afford to buy big-ticket items.
The Outbound Tender Volume Index (OTVI), which measures national freight demand by shippers’ request for capacity, fell 2.1% on a week-over-week (w/w) basis. On a year-over-year (y/y) basis, OTVI is down 30.1%. Looking at accepted tender volumes, we see a dip of 2% w/w as well as a fall of 17.5% y/y. This y/y difference confirms that actual cracks in freight demand — and not merely OTRI’s y/y decline — are driving OTVI lower.
Of the 135 markets, 49 reported higher rejection rates over the past week, though 37 of those saw increases of only 100 or fewer bps. The big story this week is Dallas, which was just rocked by freezing temperatures and ice storms that effectively shut down the region’s freight activity. Dallas’ local OTRI is only up 88 bps w/w at 2.94% but is coming down off Wednesday’s peak of 3.27%. Thankfully, the lasting impact of this weather appears to be minimal. However, freight demand in Dallas is down a considerable 15.3% w/w.
The FreightWaves TRAC spot rate from Los Angeles to Dallas, arguably one of the densest freight lanes in the country, is quickly reaching new lows. Over the past week, the TRAC rate fell 5 cents per mile to $2.22. The daily NTI (NTID), which has risen to $2.62, continues to outpace rates from Los Angeles to Dallas. Clearly, demand is down right now after the holiday period. It remains to be seen if it will pick up again in the summer.
That’s all we’ve got for this week!
Thanks for reading,
The LXB team ✌️
